Venezuela production woes tightens US supply outlook, pushing WTI to new high

Frontline WTI futures settled at a fresh four-month high Thursday as an ongoing crisis in Venezuela exacerbated supply concerns. NYMEX April WTI settled up 35 cents at $58.61/b while ICE May Brent finished down 32 cents at $67.23/b. WTI traded higher amid expectations of a tightened supply picture due to the continued deterioration of the Venezuelan oil industry, Tradition Energy analyst Gene McGillian said. Front-month WTI settled at the highest since November 12.

Venezuelan state-owned PDVSA indefinitely postponed the restart of its 120,000 b/d Petro San Felix upgrader and shut-in production at one of its fields due to a fire at four storage tanks at the facility, a source at the complex told S&P Global Platts under the condition of anonymity. PDVSA has restarted three other crude upgraders and a mixing plant, but has no naphtha inventories available to dilute the extra-heavy crude, according to a technical report seen by S&P Global Platts Thursday.

PDVSA typically procured heavy naphtha from the US Gulf Coast to help thin the country’s heavy crude and enable transportation by pipeline from oil fields to markets. But the imposition of US sanctions in January has blocked this source, and there have been no recent reports of naphtha imports from Indian or Chinese companies.

Venezuelan oil production slipped to 1.09 million b/d in February, falling 130,000 b/d in the month since the US imposed sanctions on state-owned oil company PDVSA, the US Energy Information Administration said Tuesday. US imports of Venezuelan crude into the Gulf Coast are now beginning to dwindle. Through the first two weeks of March, imports have averaged at around 122,000 b/d, down from about 160,000 b/d during the second half of February, according to US customs data.